Research #2 - Tanya Krupetskiy Professor Turner ACC-211...

Tanya Krupetskiy Professor Turner ACC-211 Research Assignment 2 Materiality a. As defined by Financial Accounting Concept #2, materiality is “a pervasive concept that relates to the qualitative characteristics, especially relevance and reliability” (FASB Concept #2, p.4). In other words, materiality shows an item’s impact on a company’s overall financial operations. Thus, if omission of that item would have influenced a reasonable person’s decision, then it is material and has to be included in the financial statements (FASB Concept #2, p.7). If the item is large enough to change the user’s opinion, then it also has to be included (FASB Concept #2, p.29). As defined in the glossary of terms for SFAC #2, materiality is “the magnitude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or

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